THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Asian Capital Holdings Limited (the Company ), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the Stock Exchange ) take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. (Incorporated in the Cayman Islands with limited liability) (Stock code: 8295) CONTINUING CONNECTED TRANSACTION INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND NOTICE OF EXTRAORDINARY GENERAL MEETING Independent Financial Adviser to the IBC and the Independent Shareholders A notice convening the extraordinary general meeting of the Company ( EGM ) to be held at Suite 601, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong on Monday, 21 March 2016 at 10:00 a.m. is set out on pages 48 to 49 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Hong Kong branch share registrar and transfer office of the Company, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish. This circular will remain on the website of the Growth Enterprise Market ( GEM ) of the Stock Exchange at on the Latest Company Announcements page for at least seven days from the date of its posting and on the website of the Company at 4 March 2016

2 CHARACTERISTICS OF GEM GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. i

3 CONTENTS Page CHARACTERISTICS OF GEM... i DEFINITIONS... 1 LETTER FROM THE BOARD... 7 LETTER FROM THE IBC LETTER FROM THE INDEPENDENT FINANCIAL ADVISER APPENDIX GENERAL INFORMATION NOTICE OF EGM ii

4 DEFINITIONS In this circular, unless the context otherwise requires, the following expressions have the meanings set out below: Adjusted Asset Value the benchmark price mutually agreed by Asian Capital (Corporate Finance) and Zhongzhi Capital, representing the average of the sum of (i) asset value of an Asset determined by reference to the closing price of the Asset as at the date of the IAM Agreement; and (ii) cost of the Asset as provided and confirmed by Zhongzhi Capital (the aggregate cost of the Investment Portfolio amounted to approximately HK$1.4 billion and the aggregate Adjusted Asset Value of the Investment Portfolio amounted to approximately HK$2.7 billion as at the date of the IAM Agreement) Allied Target Allied Target Holdings Limited, a company incorporated in Hong Kong which is an investment holding company owned as to 70% by Mr. Yeung and 30% by Phillip Capital Announcements the announcement of the Company dated 2 February 2016 in relation to, among other things, the entering into of the IAM Agreement and the clarification announcement of the Company dated 16 February 2016 Annual Caps the maximum remuneration payable to the Group by Zhongzhi Capital for the relevant period in terms of management fee and performance fee under the IAM Agreement, details of which are set out in the paragraph headed Proposed Annual Caps under the section headed IAM Agreement in the letter from the Board of this circular Asian Capital (Corporate Finance) Asian Capital (Corporate Finance) Limited, a licensed corporation under the SFO to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities and a wholly-owned subsidiary of the Company Asset any listed securities contained in the Investment Portfolio, or such other shares as the parties to the IAM Agreement may agree from time to time 1

5 DEFINITIONS associate(s) Board Business Day(s) Commencement Date Company Conditions Precedent connected person(s) Director(s) EGM GEM GEM Listing Rules Group HK$ HKIFA has the same meaning ascribed to it under the GEM Listing Rules the board of Directors a day (other than Saturday) on which banks in both Hong Kong and the PRC are generally open for business the date on which all the Conditions Precedent have been satisfied Asian Capital Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on GEM (Stock code: 8295) the conditions precedent to the IAM Agreement, details of which are set out in the paragraph headed Principal terms Conditions Precedent under the section headed IAM AGREEMENT in the letter from the Board of this circular has the same meaning ascribed to it under the GEM Listing Rules the director(s) of the Company the extraordinary general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving, inter alia, the IAM Agreement and the proposed Annual Caps the Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on GEM the Company and its subsidiaries Hong Kong dollar, the lawful currency of Hong Kong the Hong Kong Investment Funds Association, a nonprofit-making industry organisation that represents the fund management industry of Hong Kong and was incorporated in 1986 as a company limited by guarantee 2

6 DEFINITIONS Hong Kong IAM Agreement the Hong Kong Special Administrative Region of the People s Republic of China the investment advisory and management agreement dated 2 February 2016 entered into between Zhongzhi Capital and Asian Capital (Corporate Finance) IBC the independent board committee of the Company comprising all the independent non-executive Directors, namely Mr. Chan Kai Nang, Mr. Tsui Pui Yan and Mr. Yi Xiqun, which has been established to advise the Independent Shareholders in respect of the IAM Agreement and the proposed Annual Caps Independent Financial Adviser Independent Shareholder(s) Investment Portfolio Investec Capital Asia Limited, a corporation licensed to conduct type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, and is the independent financial adviser appointed to advise the IBC and the Shareholders in respect of the IAM Agreement and the proposed Annual Caps the Shareholder(s) who are not materially interested in the IAM Agreement and are not required to abstain from voting at the EGM the portfolio of Asset under the IAM Agreement, the market value of which amounting to approximately HK$4 billion as at the date of the IAM Agreement January Circular the circular dated 28 January 2016 issued by the Company in relation to, among other things, the Subscription Agreement and the New Shares Placing Agreement Jinhui Jinhui Capital Company Limited, a company incorporated in the British Virgin Islands with limited liability and is wholly-owned by Zhongzhi Capital Kang Bang Kang Bang Qi Hui (HK) Company Limited, a company incorporated in Hong Kong with limited liability and is wholly-owned by Zhongzhi Capital 3

7 DEFINITIONS Latest Practicable Date Licensing Conditions 1 March 2016, being the latest practicable date for the purpose of ascertaining certain information for inclusion in this circular the conditions imposed on the SFC Licence in respect of type 9 (asset management) regulated activity held by Asian Capital (Corporate Finance), which includes the followings: (a) (b) the licensee shall not conduct business involving the discretionary management of any collective investment scheme. The term collective investment scheme is as defined under the SFO; and the licensee shall not provide a service of managing a portfolio of futures contracts for another person Master Link Mr. Yeung New Shares Placing New Shares Placing Agreement New Shares Placing Completion Phillip Capital Master Link Assets Limited, a company incorporated in the British Virgin Islands with limited liability whose entire issued share capital is beneficially owned by Mr. Yeung Mr. Yeung Kai Cheung Patrick, the Executive Chairman of the Company and an executive Director the placing of an aggregate of 400,000,000 new Shares pursuant to the terms of the New Shares Placing Agreement the placing agreement dated 5 January 2016 entered into between the Company and Haitong International Securities Company Limited in relation to the New Shares Placing, details of which are disclosed in the January Circular completion of the New Shares Placing pursuant to the New Shares Placing Agreement Phillip Capital (HK) Limited, a company incorporated in Hong Kong, which is an investment holding company owned as to 85% by Mr. Lim Hua Min 4

8 DEFINITIONS PRC RMB SFC SFC Licence SFO Share(s) Share Purchase the People s Republic of China but excluding, for the purposes of this circular, Hong Kong, the Macau Special Administrative Region of the People s Republic of China and Taiwan Renminbi, the lawful currency of the PRC the Securities and Futures Commission of Hong Kong the SFC licence issued or given to and maintained by Asian Capital (Corporate Finance) the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ordinary share(s) of HK$0.01 each in the share capital of the Company the purchase of an aggregate of 648,345,791 Shares by Jinhui and Kang Bang pursuant to the Share Purchase Agreement Share Purchase Agreement the share purchase agreement dated 28 October 2015 entered into among Master Link, Allied Target, Phillip Capital, Jinhui, Kang Bang, Mr. Yeung and Zhongzhi Capital in respect of the Share Purchase (as amended and supplemented by the supplemental share purchase agreement dated 5 January 2016), details of which are disclosed in the January Circular Share Purchase Completion Shareholder(s) Stock Exchange Subscription completion of the Share Purchase pursuant to the Share Purchase Agreement holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited the subscription of an aggregate of 1,630,756,836 new Shares by Jinhui and Kang Bang pursuant to the Subscription Agreement 5

9 DEFINITIONS Subscription Agreement the subscription agreement dated 28 October 2015 entered into among the Company, Jinhui and Kang Bang in respect of the Subscription (as amended and supplemented by the supplemental subscription agreement dated 5 January 2016), details of which are disclosed in the January Circular Subscription Completion completion of the Subscription pursuant to the Subscription Agreement Total Asset Value US$ Valuation Date aggregate asset value of each Asset as at each Valuation Date, determined by reference to the average closing market price of each Asset as quoted on the relevant stock exchange of the last trading day of each of the three calendar months of that quarter U.S. Dollar, the lawful currency of the United States of America the last day of each quarter of every calendar year, being 31 March, 30 June, 30 September and 31 December; and if such date is not a Business Day, the preceding Business Day Zhong Hai Sheng Rong ( ) (Zhong Hai Sheng Rong (Beijing) Capital Management Company Limited*), a company incorporated in the PRC with limited liability and is wholly-owned by Mr. Xie Zhikun Zhongzhi Capital (Zhongzhi Capital Group*), a company incorporated in the PRC with limited liability and is owned as to 95% by Zhong Hai Sheng Rong and as to 5% by (Beijing Zhong Hai Ju Rong Investment Management Company Limited*), respectively % per cent Certain amounts and percentages figures included in this circular are subject to rounding adjustments. Unless the context requires otherwise, translation of RMB into HK$ is made in this circular, for illustration purpose only, at the rate of approximately RMB1 = HK$1.18. * For identification purpose only 6

10 LETTER FROM THE BOARD (Incorporated in the Cayman Islands with limited liability) (Stock code: 8295) Executive Directors: Mr. YEUNG Kai Cheung Patrick (Executive Chairman) Mr. CHAN Hok Leung Registered office: P.O. Box 309, Ugland House Grand Cayman, KY Cayman Islands Non-executive Director: Mr. XIN Luo Lin (Honorary Chairman) Independent non-executive Directors: Mr. CHAN Kai Nang Mr. TSUI Pui Yan Mr. YI Xiqun Head office and principal place of business in Hong Kong: Suite 601, Bank of America Tower 12 Harcourt Road Central, Hong Kong 4 March 2016 To the Shareholders Dear Sir or Madam, CONTINUING CONNECTED TRANSACTION INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND NOTICE OF EXTRAORDINARY GENERAL MEETING INTRODUCTION References are made to (i) the Announcements in respect of the IAM Agreement; and (ii) the joint announcement dated 24 February 2016 issued by the Company and Jinhui in relation to, among other things, the Share Purchase Completion and the Subscription Completion. On 2 February 2016, Asian Capital (Corporate Finance) entered into the IAM Agreement with Zhongzhi Capital, pursuant to which Asian Capital (Corporate Finance) is conditionally appointed as an investment manager of Zhongzhi Capital for managing the Investment Portfolio. The IAM Agreement is conditional upon the Conditions Precedent having been fulfilled. 7

11 LETTER FROM THE BOARD The purpose of this circular is to provide the Shareholders with further details of, among other things, (i) the IAM Agreement; (ii) the letter from the IBC to the Independent Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the IBC and the Independent Shareholders; and (iv) the notice convening the EGM. IAM AGREEMENT Asian Capital (Corporate Finance), a wholly-owned subsidiary of the Company, entered into the IAM Agreement with Zhongzhi Capital on 2 February 2016, pursuant to which Asian Capital (Corporate Finance) is conditionally appointed as an investment manager of Zhongzhi Capital for managing the Investment Portfolio. Principal terms The principal terms of the IAM Agreement include: Conditions Precedent: The IAM Agreement is conditional upon the following conditions precedent having been fulfilled: (a) the Share Purchase Completion and Subscription Completion having taken place; and (b) the issue of announcement by the Company and the passing of all relevant resolutions in relation to the IAM Agreement at the EGM. As at the Latest Practicable Date, Condition Precedent (a) above has been fulfilled. Term of appointment: Scope of services: Commencing on the date on which all the Conditions Precedent are satisfied and expiring on 31 March 2018 and is renewable on mutual agreement in writing between Zhongzhi Capital and Asian Capital (Corporate Finance) subject to compliance with the applicable GEM Listing Rules unless terminated pursuant to the terms of the IAM Agreement. Asian Capital (Corporate Finance) shall provide investment advice and investment management services in managing the Investment Portfolio (including but not limited to identifying and evaluating investment and divesting opportunities, advising, implementing and monitoring investments) to Zhongzhi Capital. 8

12 LETTER FROM THE BOARD Remuneration: Asian Capital (Corporate Finance) will be entitled to either (a) management fee; or (b) performance fee, but not both, according to the following: (a) Management fee A quarterly management fee, which is payable in arrears within 90 days after the end of each calendar year shall be calculated in accordance with the formula below: Management fee = V x R x 3/12 V: Total Asset Value (as at each Valuation Date) R: Rate of the management fee, which is equivalent to (i) 0.5% per annum if the Licensing Conditions have not been withdrawn by the SFC during the term of the IAM Agreement; or (ii) 1.0% per annum if the Licensing Conditions have been withdrawn by the SFC during the term of the IAM Agreement and commencing from the date thereof (b) Performance fee In the event there is any disposal of an Asset by Zhongzhi Capital during the term of the IAM Agreement, a performance fee, which shall be payable within 90 days after the receipt of the amount realised from such disposal by Zhongzhi Capital, calculated in accordance with the formula below: Performance fee = (P2 - P1 - C) x F P1: Adjusted Asset Value in respect of the Asset P2: Gross amount realised from the disposal of the Asset C: Relevant tax liability arising therefrom F: Rate of the performance fee, which is equivalent to 30% If the calculation for the performance fee produces a negative figure, no performance fee shall be payable by Zhongzhi Capital. 9

13 LETTER FROM THE BOARD Determination of the remuneration The total remuneration accrued by Zhongzhi Capital to Asian Capital (Corporate Finance) during a particular calendar year shall represent: (i) (ii) the performance fee, if the performance fee is higher than the management fee; or the management fee, if the management fee is no less than the performance fee. The total remuneration under the IAM Agreement, including the management fee and the performance fee, were determined after arm s length negotiations between Zhongzhi Capital and Asian Capital (Corporate Finance) with reference to the terms of investment management service (including the relevant remuneration packages) of other listed companies in Hong Kong. The terms of investment management service of these listed companies typically have (i) management fee which ranged from 1.5% to 2% of the asset value of the portfolio per annum; and (ii) performance fee which ranged from 10% to 20% of the investment return by comparing to the benchmark value of the assets in the portfolio. Moreover, Zhongzhi Capital and Asian Capital (Corporate Finance) also considered (i) the anticipated size of the Investment Portfolio, associated costs and expenses involved for the provision of advisory and asset management services; (ii) the duties and responsibilities of Asian Capital (Corporate Finance) under the IAM Agreement; (iii) the Licensing Conditions; and (iv) the fact that only one of the fees (management fee or performance fee), but not both, will be accrued under the IAM Agreement. The Group has recently employed Mr. Alfred Lim, who was a type 9 (asset management) responsible officer possessing over 25 years of experience in the asset management industry and investment field, to supervise the growing asset management business of the Group. It is expected that Mr. Alfred Lim, together with the Group s existing and expanding team, will monitor the asset management services pursuant to the internal control policy and ensure that the remuneration policy as set out in the IAM Agreement will be consistently applied throughout the term of the IAM Agreement. Moreover, the audit committee of the Board will regularly review the relevant internal control procedures when performing annual review of the continuing connected transactions before making its confirmations pursuant to the GEM Listing Rules. Having considered the above, the Directors are of the view that the terms of the IAM Agreement, including the relevant remuneration, are on normal commercial terms and in the interest of the Shareholders as a whole. Historical transaction amounts There was no historical transaction amount between the Group and Zhongzhi Capital in relation to the provision of investment advisory and management services during the three years ended 31 December 2014 and up to the Latest Practicable Date. 10

14 LETTER FROM THE BOARD Proposed Annual Caps It is proposed that the Annual Caps for the following periods will be limited to as follow: Period covered Proposed Annual Cap HK$ Commencement Date to 31 March 2016 (Note) 150,000,000 1 April 2016 to 31 March ,000,000 1 April 2017 to 31 March ,000,000 Note: Assuming the IAM Agreement will become unconditional before 31 March In the event that the aggregate annual management fee and performance fee payable to the Group by Zhongzhi Capital under the IAM Agreement exceeds the respective proposed Annual Cap for any of the periods stated above, the Company will comply with all the relevant requirements of Chapter 20 of the GEM Listing Rules as and when necessary. Basis of determination of the Annual Caps The proposed Annual Caps were determined based on the expected remuneration (taking into account the anticipated tax obligations on disposal of the Investment Portfolio) under the IAM Agreement and assuming the market value of the Assets will remain at similar level from the Commencement Date to 31 March The Annual Cap for the period from the Commencement Date to 31 March 2016 was determined having considered (i) there was an initial gap of approximately HK$1.3 billion between the Adjusted Asset Value and the market value of the Investment Portfolio as at the date of the IAM Agreement; (ii) the stock markets have been extremely volatile since 1 January 2016 and there is a possibility that a substantial amount (up to 40%) of the Asset initially contained in the Investment Portfolio may be realized upon commencement of service under the IAM Agreement; and (iii) there is a possibility that the market value of the Investment Portfolio may fluctuate significantly from the date of the IAM Agreement to 31 March 2016 amid the said extremely volatile stock markets. These factors may all give rise to a significant performance fee (net of relevant tax of liability of 20%) even in the short period to 31 March The proposed Annual Caps for the periods from 1 April 2016 to 31 March 2017 and 1 April 2017 to 31 March 2018 were determined based on (i) some of the Assets (not less than 60%) initially contained in the Investment Portfolio, of which the market value is approximately HK$1.3 billion higher than the Adjusted Asset Value as at the date of the IAM Agreement, may be realized during the two periods; (ii) it is expected that Asian Capital (Corporate Finance) will manage the Assets with average market value close to HK$4.0 billion; and (iii) it is further expected that there will be investment returns (anticipated to be not less than 8%) to the Investment Portfolio through the services to be provided under the IAM Agreement. 11

15 LETTER FROM THE BOARD Reasons for entering into the IAM Agreement The Group, through Asian Capital (Corporate Finance), is licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO. As disclosed in the January Circular, Asian Capital (Corporate Finance) intended to activate its type 9 (asset management) regulated activity to offer more comprehensive services to its clients. The Group has recently employed Mr. Alfred Lim, who, together with the existing and expanding team of Asian Capital (Corporate Finance), will enable Asian Capital (Corporate Finance) to carry out the asset management services. With new capital from the Subscription and the New Shares Placing and leveraging upon the strength of Zhongzhi Capital in the businesses of asset management and investment, the Board believes that the Group will be able to also engage in these lines of businesses to expand and diversify its income stream for the benefit of the Company and its Shareholders as a whole. The Directors (including the independent non-executive Directors) consider that the terms of the IAM Agreement are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and are in the interests of the Company and the Shareholders as a whole, and that the proposed Annual Caps are fair and reasonable. Apart from the asset management business under the IAM Agreement, after the Subscription Completion and New Shares Placing Completion which took place on 24 February 2016, the Group will continue to develop the corporate finance activities, underwriting business, securities investments as well as money lending business and explore the possibility of expansion of investment including mergers and acquisitions as well as asset management business to jurisdictions other than Hong Kong. It is intended that the aggregate net proceeds from the Subscription and the New Shares Placing will be applied in (i) underwriting business; (ii) money lending business; (iii) proprietary investment business; (iv) asset management business; and (v) business expansion, details of which are set out in the section headed Letter from the Board Reasons for and benefits of the Subscription and the New Shares Placing Intended use of proceeds of the Subscription and the New Shares Placing in the January Circular. With these development plans moving ahead together with the Group s existing businesses, the Group plans to reduce the level of reliance on the IAM Agreement. The Board expects that, since the Group will not solely be reliant on any particular line of the business, the Group s overall performance will benefit from a balanced mix of revenue in the future. INFORMATION ON THE PARTIES The Group The Company was incorporated in the Cayman Islands as an exempted company with limited liability and its Shares are listed on GEM. The principal activity of the Company is investment holding and its subsidiaries are principally engaged in the provision of corporate advisory services and related activities, investment in various types of assets as well as money lending and asset management. 12

16 LETTER FROM THE BOARD Asian Capital (Corporate Finance) is a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO. Based on its qualification as a Qualified Foreign Limited Partnership, Asian Capital (Corporate Finance) is in the process of applying for and setting up a wholly-owned foreign funded equity investment management enterprise in Qianhai, Shenzhen, the PRC. Zhongzhi Capital Zhongzhi Capital is owned as to 95% by Zhong Hai Sheng Rong and as to 5% by (Beijing Zhong Hai Ju Rong Investment Management Company Limited*), respectively. The ultimate parent company of Zhong Hai Sheng Rong is Zhonghai Sheng Feng (Beijing) Capital Management Limited Company* ( ( ) ) and the ultimate beneficial owner of which is Mr. Xie Zhikun. Zhongzhi Capital was founded in 2011 with a registered capital of RMB1 billion. Zhongzhi Capital is one of the leading investment managers in China which focuses on acquisition and investment in industry leading enterprises and listed companies and is one of the largest industry consolidation funds in China. Based on its excellent performance, it was awarded by the CV Awards ( ), issued by China Venture Investment Consulting Group ( ), an investment consulting company in the PRC which provides information, data and intelligence relating to the capital markets, as the China s top ten most active Chinese private equity investment institution in 2015, China s top ten venture capital and private equity investment institution with the best investment returns in 2015 and China s top ten most innovative Chinese private equity investment institution, venture capital and private equity investment institution in Zhongzhi Capital s key services include private equity investments in the primary market, private placement, mergers and acquisitions of overseas business and funds and merger and acquisition consulting etc. The business partners it works with are ranging from top-tier domestic industry leaders and the world s leading professional institutions. RELATIONSHIP BETWEEN THE PARTIES TO THE IAM AGREEMENT As at the Latest Practicable Date, Jinhui and Kang Bang are the controlling Shareholders interested in a total of 2,279,102,627 Shares, representing approximately 64.78% of the issued share capital of the Company. Jinhui and Kang Bang are wholly-owned subsidiaries of Zhongzhi Capital. Accordingly, Zhongzhi Capital is a connected person of the Company and the transactions contemplated under the IAM Agreement will constitute continuing connected transactions of the Company under Chapter 20 of the GEM Listing Rules. LISTING RULES IMPLICATIONS As the applicable percentage ratios in respect of the proposed Annual Caps exceed 25% and the proposed Annual Caps are more than HK$10,000,000, the transactions contemplated under the IAM Agreement are subject to the reporting, announcement, Independent Shareholders approval and annual review requirements under Chapter 20 of the GEM Listing Rules. 13

17 LETTER FROM THE BOARD Since the IAM Agreement is conditional upon the Share Purchase Completion and the Subscription Completion and Master Link and Allied Target were the vendors under the Share Purchase Agreement, Mr. Yeung was deemed to have material interests in the transactions contemplated under the IAM Agreement as at the date of the IAM Agreement. Save for Mr. Yeung who had abstained from voting on the relevant Board resolution to approve the IAM Agreement and the proposed Annual Caps, no Directors were required to abstain from voting on the aforementioned Board resolution. Jinhui and Kang Bang are wholly-owned subsidiaries of Zhongzhi Capital. Accordingly, Jinhui, Kang Bang and their respective associates are considered to have material interests in the transactions contemplated under the IAM Agreement and shall abstain from voting at the EGM. Since the Share Purchase Completion and the Subscription Completion have already taken place on 24 February 2016, Master Link and Allied Target no longer have any material interests in the transactions contemplated under the IAM Agreement. As such, other than Jinhui, Kang Bang and their respective associates, no Shareholders are required to abstain from voting on the resolution approving the IAM Agreement and the proposed Annual Caps at the EGM. EGM The EGM will be convened for the Independent Shareholders to consider and, if thought fit, to pass an ordinary resolution to approve by poll the IAM Agreement and all other transactions contemplated thereunder as well as the proposed Annual Caps. A notice convening the EGM to be held at Suite 601, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong on Monday, 21 March 2016 at 10:00 a.m. is set out on pages 48 to 49 of this circular. A form of proxy for use at the EGM is enclosed herewith. Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Hong Kong branch share registrar and transfer office of the Company, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish. RECOMMENDATIONS Your attention is drawn to the letters from the IBC and the Independent Financial Adviser on page 16 and pages 17 to 41 of this circular. As set out in the letter from the IBC, members of the IBC, having taken into account and based on the recommendation of the Independent Financial Adviser, consider that the terms of the IAM Agreement and the proposed Annual Caps are fair and reasonable so far as the interests of the Independent Shareholders are concerned and that the entering into of the IAM Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that all Independent Shareholders should vote in favour of the resolution to be proposed at the EGM to approve the IAM Agreement and the proposed Annual Caps. 14

18 LETTER FROM THE BOARD ADDITIONAL INFORMATION Your attention is drawn to the additional information set out in the appendix to this circular. Yours faithfully, By order of the Board Asian Capital Holdings Limited LI Pui Yee Company Secretary 15

19 LETTER FROM THE IBC (Incorporated in the Cayman Islands with limited liability) (Stock code: 8295) 4 March 2016 To the Independent Shareholders Dear Sir or Madam, CONTINUING CONNECTED TRANSACTION INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT We refer to the circular dated 4 March 2016 issued by the Company (the Circular ) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein, unless the context otherwise requires. We have been appointed as members of the IBC to advise the Independent Shareholders in respect of the IAM Agreement and the proposed Annual Caps, details of which are set out in the letter from the Board in the Circular. Investec Capital Asia Limited has been appointed to advise the IBC and the Independent Shareholders in respect of the IAM Agreement and the proposed Annual Caps. We wish to draw your attention to the letter from the Board set out on pages 7 to 15 of the Circular which contains, inter alia, information about the terms of the IAM Agreement and the proposed Annual Caps and the letter from the Independent Financial Adviser to the IBC and the Independent Shareholders set out on pages 17 to 41 of the Circular which contains its advice in respect of the terms of the IAM Agreement and the proposed Annual Caps. Having considered the terms of the IAM Agreement and taking into account the advice from the Independent Financial Adviser, we concur with the views of the Independent Financial Adviser and consider that the IAM Agreement is on normal commercial terms and in the ordinary and usual course of business of the Group. We also consider that the terms of the IAM Agreement and the proposed Annual Caps are fair and reasonable so far as the interests of the Independent Shareholders are concerned and that the entering into of the IAM Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the IAM Agreement and the proposed Annual Caps. Yours faithfully, For and on behalf of the IBC Mr. CHAN Kai Nang Independent non-executive Director Mr. TSUI Pui Yan Independent non-executive Director Mr. YI Xiqun Independent non-executive Director 16

20 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Set out below is the text of a letter of advice from Investec Capital Asia Limited to the IBC and the Independent Shareholders in respect of the IAM Agreement and the transactions contemplated thereunder which has been prepared for the purpose of inclusion in this circular. Investec Capital Asia Limited 3609, 36/F, Two International Finance Centre 8 Finance Street, Central, Hong Kong Tel/ : (852) March 2016 To: The IBC and the Independent Shareholders of Asian Capital Holdings Limited Dear Sir or Madam, CONTINUING CONNECTED TRANSACTION IN RELATION TO THE IAM AGREEMENT A. INTRODUCTION We refer to our appointment as the independent financial adviser to the IBC and the Independent Shareholders in respect of the continuing connected transaction in relation to the IAM Agreement, details of which are set out in the circular of the Company dated 4 March 2016 (the Circular ), of which this letter forms part. This letter contains our advice to the IBC and the Independent Shareholders as to whether the terms of continuing connected transaction (together with the proposed Annual Caps) are (i) conducted under normal commercial terms and in the usual course of business; (ii) fair and reasonable so far as the Independent Shareholders are concerned and as to voting in respect of the relevant resolution at the EGM; and (iii) in the interests of the Company and the Shareholders as a whole. Unless otherwise stated, terms defined in the Circular have the same meanings in this letter. As stated in the Circular, on 2 February 2016, Asian Capital (Corporate Finance), a wholly-owned subsidiary of the Company, entered into the IAM Agreement with Zhongzhi Capital, pursuant to which Asian Capital (Corporate Finance) is conditionally appointed as an investment manager of Zhongzhi Capital for managing the Investment Portfolio. The IAM Agreement is conditional upon the fulfillment of the Conditions Precedent. Jinhui and Kang Bang are wholly-owned subsidiaries of Zhongzhi Capital. With Zhongzhi Capital being a connected person of the Company, transactions contemplated under the IAM Agreement constitutes continuing connected transactions of the Company under Chapter 20 of the GEM Listing Rules. As the applicable percentage ratios in respect of the proposed Annual Caps exceed 25% and the proposed Annual Caps are more than HK$10,000,000, the transactions contemplated under the IAM Agreement are non-exempt continuing connected transactions and subject to the reporting, announcement, Independent Shareholders approval and the annual review requirements under Chapter 20 of the GEM Listing Rules. 17

21 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER B. THE IBC The IBC, comprising all the independent non-executive Directors, namely Mr. Chan Kai Nang, Mr. Tsui Pui Yan and Mr. Yi Xiqun, has been established to advise the Independent Shareholders as to the continuing connected transaction. As the Independent Financial Adviser to the IBC and Independent Shareholders, our role is to give an independent opinion to the IBC and the Independent Shareholders as to whether the transaction contemplated under the IAM Agreement and the proposed Annual Caps are on normal commercial terms, in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole, whether the terms of the IAM Agreement and the proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and as to voting in respect of the relevant resolution at the EGM. We also act as independent financial adviser to the independent board committee and independent shareholders of the Company in relation to mandatory unconditional cash offers of the shares and options of the Company. Under this engagement, we provided independent advisory services to the IBC and Independent Shareholders of the Company pursuant to the GEM Listing Rules, and received a normal advisory fee from the Company for such services. Notwithstanding our relationship with the Company due to the said engagement, we have assessed that such relationship would not affect our independence in providing the advice to the IBC and the Independent Shareholders regarding the IAM Agreement and the proposed Annual Caps. As at the Latest Practicable Date, we were independent from and not connected with the Group pursuant to Rule of the GEM Listing Rules, and accordingly, qualified to give independent advice to the IBC and the Independent Shareholders regarding the IAM Agreement and the proposed Annual Caps. Apart from the normal advisory fee payable to us in connection with our appointment as the Independent Financial Adviser, no arrangement exists whereby we shall receive any other fees or benefits from the Company. C. BASIS OF OUR OPINION In formulating our advice, we have relied solely on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Group and/or the Directors. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise provided or made or given by the Group and/or the Directors and/or its senior management staff (the Management ) and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations made or provided by the Directors and/or the Management contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or the Directors and/or the Management that no material facts have been omitted from the information provided and referred to in the Circular. 18

22 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER We consider that we have reviewed all information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Group and/or the Directors and/or its Management and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the businesses and affairs of the Group, Zhongzhi Capital, Jinhui and Kang Bang or their respective affiliates. D. PRINCIPAL FACTORS CONSIDERED In formulating our opinion regarding the IAM Agreement and the transactions contemplated thereunder, we have taken into consideration the following principal factors: 1. Background information i. Information on the Group The Company was incorporated in the Cayman Islands as an exempted company with limited liability and its Shares are listed on GEM. The principal activity of the Company is investment holding and its subsidiaries are principally engaged in the provision of corporate advisory services and related activities, investment in various types of assets as well as money lending and asset management. Asian Capital (Corporate Finance) is a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO. Based on its qualification as a Qualified Foreign Limited Partnership, Asian Capital (Corporate Finance) is in the process of applying for and setting up a wholly-owned foreign funded equity investment management enterprise in Qianhai, Shenzhen, the PRC. 19

23 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER ii. Historical financial performance of the Group Set out below is a summary of the Group s consolidated statements of income for the year ended 31 December 2014 and 2013 as extracted from the 2014 annual report of the Company (the 2014 Annual Report ) and the unaudited financials for the 12 months ended 31 December 2015 from the 2015 second interim report of the Company (the 2015 Second Interim Report, published by the Company: For the 12 months For the year ended 31 December ended 31 December Approximately Approximately Approximately HK$ 000 HK$ 000 HK$ 000 (Audited) (Audited) (Unaudited) Revenue 31,638 24,937 32,265 Corporate advisory income 27,094 24,771 30,110 Placing and underwriting service income/arrangement fee 4, ,155 Securities dealing commission Profit/(Loss) before tax 10,920 (2,116) 8,447 Profit/(Loss) for the period/year attributable to owners of the Company 8,635 (1,331) 6,751 For the two years ended 31 December 2013 and 2014 The Group recorded revenue of approximately HK$24.9 million for the year ended 31 December 2014, representing a decrease of approximately 21.2% from approximately HK$31.6 million for the year ended 31 December Revenue was mainly attributable to income from the Group s corporate advisory service of approximately HK$24.8 million, representing approximately 99.3% of the Group s revenue for the year ended 31 December Revenue for the year ended 31 December 2014 from placing and underwriting service/arrangement fee amounted to approximately HK$0.1 million, representing approximately 0.5% of the Group s revenue, as compared to revenue from placing and underwriting service of approximately HK$4.3 million, representing approximately 13.7% of the Group s revenue for the year ended 31 December Revenue from securities dealing commission contributed approximately HK$0.04 million, representing approximately 0.2% of the Group s revenue for the year ended 31 December 2014, decreasing from approximately HK$0.2 million for the year ended 31 December

24 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER The net loss of the Group amounted to approximately HK$1.3 million for the year ended 31 December 2014 as compared to a net profit of approximately HK$8.6 million for the year ended 31 December Such significant reversal in the Group s profitability is mainly attributed to the lack of milestone achievements in distressed asset recovery and listings assignments in In the absence of such assignments and listings in 2014, profitability of the Group was significantly impacted. For the 12 months ended 31 December 2015 For the 12 months ended 31 December 2015 the Group generated revenue of approximately HK$32.3 million; representing an increase of approximately 29.4% from approximately HK24.9 million for the year ended 31 December 2014 which was mainly driven by all round increases in corporate advisory income and placing income; whilst operating expenses were contained at a modest period-on-period increase of 5.2% at approximately HK$27.9 million. The resultant pre-tax profit for the 12 months ended 31 December 2015 was approximately HK$8.4 million, compared to a pre-tax loss of approximately HK$2.1 million for the corresponding 12 months period in iii. Historical financial position of the Group Set out below are the consolidated financial positions of the Group as at 31 December 2014 and 2015 as extracted from the 2014 Annual Report and the 2015 Second Interim Report: As at 31 December Approximately Approximately HK$ 000 HK$ 000 (audited) (unaudited) Non-current assets 4,351 3,710 Current assets 132, ,779 Total assets 136, ,489 Non-current liabilities Current liabilities 6,374 71,328 Total liabilities 6,374 71,328 Net current assets 126, ,451 Net assets/total equity 130, ,161 Net Asset Value (the NAV ) per Share attributable to owners of the Company (Note) HK$0.09 HK$0.10 Note: The NAV per Share attributable to owners of the Company is calculated based on the Shares in issue as at the end of the respective period/year 21

25 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Financial positions of the Group as at 31 December 2014 and 2015 As set out in the 2015 Second Interim Report, non-current assets of the Group was approximately HK$3.7 million, representing a drop of approximately 14.7% from approximately HK$4.4 million as at 31 December In relation to the current assets of the Group, the Group aggregated current assets valued at approximately HK$205.8 million as at 31 December 2015, representing an increase of approximately 55.4%. Such increase was mainly attributable to increased amount of cash held by the Company on behalf of its clients. These cash are held and maintained segregated trust accounts with a licensed bank arising from the Company s normal course of business. The Group did not record any non-current liabilities as at 31 December 2014 and 2015, while total liabilities as at 31 December 2015 amounted to approximately HK$71.3 million, as compared to total liabilities of approximately HK$6.4 million as at 31 December 2014, representing an increase of approximately HK$64.9 million. Such change was mainly attributable to a significant change in trade payables due to increased client cash holdings in segregated trust accounts. This was reflected in similar magnitude increase in the Company s current asset and as a result, the change in net assets has been moderate, increasing mildly from approximately HK$130.4 million as at 31 December 2014 to approximately HK$138.2 million as at 31 December Information on Zhongzhi Capital Zhongzhi Capital is owned as to 95% by Zhong Hai Sheng Rong and as to 5% by (Beijing Zhong Hai Ju Rong Investment Management Company Limited*), respectively. The ultimate parent company of Zhong Hai Sheng Rong is Zhonghai Sheng Feng (Beijing) Capital Management Limited Company* ( ( ) ) and the ultimate beneficial owner of which is Mr. Xie Zhikun. Zhongzhi Capital was founded in 2011 with a registered capital of RMB1 billion. Zhongzhi Capital is one of the leading investment managers in China which focuses on acquisition and investment in industry leading enterprises and listed companies and is one of the largest industry consolidation funds in China. Based on its excellent performance, it was awarded by the CV Awards ( ), issued by China Venture Investment Consulting Group ( ), an investment consulting company in the PRC which provides information, data and intelligence relating to the capital markets, as the China s top ten most active Chinese private equity investment institution in 2015, China s top ten venture capital and private equity investment institution with the best investment returns in 2015 and China s top ten most innovative Chinese private equity investment institution, venture capital and private equity investment institution in Zhongzhi Capital s key services include private equity investments in the primary market, private placement, mergers and acquisitions of overseas business and funds and merger and acquisition consulting etc. The business partners it works with range are ranging from top-tier domestic industry leaders and the world s leading professional institutions. 22